Correlation Between Mazda and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both Mazda and Polestar Automotive at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mazda and Polestar Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mazda Motor and Polestar Automotive Holding, you can compare the effects of market volatilities on Mazda and Polestar Automotive and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mazda with a short position of Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mazda and Polestar Automotive.
Diversification Opportunities for Mazda and Polestar Automotive
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mazda and Polestar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mazda Motor and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive and Mazda is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mazda Motor are associated (or correlated) with Polestar Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polestar Automotive has no effect on the direction of Mazda i.e., Mazda and Polestar Automotive go up and down completely randomly.
Pair Corralation between Mazda and Polestar Automotive
Assuming the 90 days horizon Mazda Motor is expected to generate 0.46 times more return on investment than Polestar Automotive. However, Mazda Motor is 2.19 times less risky than Polestar Automotive. It trades about -0.16 of its potential returns per unit of risk. Polestar Automotive Holding is currently generating about -0.21 per unit of risk. If you would invest 680.00 in Mazda Motor on September 3, 2024 and sell it today you would lose (78.00) from holding Mazda Motor or give up 11.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mazda Motor vs. Polestar Automotive Holding
Performance |
| Timeline |
| Mazda Motor |
| Polestar Automotive |
Mazda and Polestar Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mazda and Polestar Automotive
The main advantage of trading using opposite Mazda and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mazda position performs unexpectedly, Polestar Automotive can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Polestar Automotive will offset losses from the drop in Polestar Automotive's long position.The idea behind Mazda Motor and Polestar Automotive Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Polestar Automotive vs. GreenPower Motor | Polestar Automotive vs. ZEEKR Intelligent Technology | Polestar Automotive vs. Volcon Inc | Polestar Automotive vs. Ford Motor |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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